When Shirley Smith opened her paper Sunday morning, she was thrilled to see an insert announcing her favorite store was having a sale.

"I was looking for birthday presents for my grandson, and they have a booklet with 30 percent off on Arizona," Amith said.

So she headed to the boys department at JC Penney at Brookfield Square.

"I started looking at the prices because it's 30 percent, and I was like, 'OK, 30 percent off, which price is which,' because I wanted to save money," Smith said.

That's when she noticed little white stickers on the price tags.

"Twenty dollars and $23 on boys' shorts," Smith said.

She peeled back a sticker.

"It said $16 underneath," Smith said. "I started looking at the other ones. The prices were all lower. And I thought, 'What the heck is this?'"

Smith found a sales clerk.

"I said, 'How do you explain these tickets?'" Smith said. She said, 'Well, all you customers wanted sale prices and coupons back, so this is what corporate instructed us to do.'"

Frustrated, Smith called WISN 12 News, which took cellphone cameras to the two Milwaukee-area Penney's stores. At Southridge Mall, staff had blacked out many of the original prices under the white price stickers.

At Brookfield Square, cameras found many of the original perforated price segments of the original tags removed, but some remained, revealing original prices and dramatic markups.

Of a sample of 15 items WISN 12 News purchased, 14 were marked up an average of 55 percent. For example, men's shorts originally $12, were $20 - a 66 percent markup, and a junior's T-shirt, the original price was $5, the new price was $12 -- a 140 percent markup.

The men's shorts were on sale for $14.99. That sale price was still 25 percent over the original $12. The juniors T-shirt was on sale for $7.99 -- a full 50 percent over the original price.

Overall, WISN 12 News paid less than the original price on four items, paid the original price, or more, on 11 items.

"Can I mark up my stuff to say I've marked it down?" Henry asked Sandy Chalmers with the Wisconsin Department of Agriculture, Trade and Consumer Protection.

"You just can't make up a price and then say 50 percent off," Chalmers said. "Everyone wants a good deal, but this practice of arbitrarily inflating a price, and then saying, 'We're marking it down. It's 50 percent off the made up price' -- that's a violation under the state code."

Chalmers said retailers can mark up prices as much as they want as long as they actually offer their goods for sale at those prices for four weeks out of a 90-day period.

A Penney's spokeswoman told WISN 12 News the company complies with retail pricing laws and began marking up merchandise, particularly its in-store brands in March.

"While our prices continue to represent a tremendous value, we now understand that customers are motivated by promotions and prefer to receive discounts through sales and coupons applied at checkout," she said.

Just last week, Penney's released a new ad -- an apology after the company adopted a no-sale approach that cost Penney's billions last year alone.

"Come back to JC Penney. We heard you. Now we'd love to see you," the ad says.

"I feel really like betrayed almost," Smith said.

Smith said she sees no comeback story here. After uncovering the store's poorly disguised markups, she took her coupon and advertisement and went home.

"That's a terrible thing to do, and say you're a valued customer? Because that's a slap in the face, like they're laughing at you, you know?" Smith said.

Wisconsin's consumer protection officials said they will investigate complaints about the price hikes and take appropriate action.

The JC Penney spokeswoman said the company understands its customers' concerns, but said this was an important move for the future of JC Penney to remain competitive.